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Ever wondered how it is that two people make a similar call, fly next to one another on a plane, rent the same type of virtual server or use the same SaaS application but end up paying totally different bills. Big companies have understood since a long time that rating and charging is the key to making more money for the same service. As long as the user can be convinced that they are paying more because of some valid reason (e.g. prepaid contract, same-day return flight, on-demand vs reserved instance, monthly vs yearly subscription, etc.), a similar service can be sold at different prices.

For a long time it was expensive to do advanced rating and charging. Licensing could easily be millions. That day has changed. After a very productive discussion, OpenRate has decided to offer again a free GPL version of their open source rating and mediation solution.

Why is an open source rating and mediation solution so important?

Online charging, rating and mediation used to be something that only the most diehard telecom experts could really grasp. There was no need for it outside of the telecom and some other major industries.

However P2P, Mobile Apps, Cloud Computing, M2M, Social Networks, Online Games, Big Data, etc. have brought us VoIP for P2P, In-App Micro Payments & Subscriptions, mCommerce, IaaS, SaaS, PaaS, sensor network event subscription, social commerce, fire hose subscriptions, virtual goods purchases, data set per-event access fees, etc. All of these technologies are exploring new ways of generating money. Unfortunately none is able to afford a €1-€5/license per user per month for a professional solution. At least not from day one. With OpenRate developers, marketers, product managers, etc. are able to explore new frontiers in monetization without any upfront risk. Subscriptions, one-time-fees, pre-paid, real-time charging, discounts, etc. it is all possible now. OpenRate is a very flexible framework in which developers can use what they need.

So if you are incubating a SaaS offering that wants to push the limits of prepaid and subscriptions, an online game with a catalogue of virtual goods, a social network with a cashflow problem, an M2M platform in need of money, an IaaS seller with a large set of configurable parameters, etc. you should be looking at how rating and charging can make you more money…

Of course if you are new to the rating and charging market and want training, consultancy or need a support contract, be sure to check out the OpenRate Commercial Offering. OpenRate is a freemium company that wants to understand your specific needs in order to offer the best possible solutions, so get in contact with them on the OpenRate Linkedin Community Site.

It would be good to see OpenRate be integrated with other Open Source and Freemium solutions, e.g. open source commerce solutions, like OpenCart, could use an advanced SaaS subscriptions and discount management extension, etc. This is an open invitation for developers to let their imagination flow and share it with the rest of us…

P2P video streaming has finally arrived. It took a little bit longer than expected but expect users to move away from sites like Mega Upload and to move to BitTorrent Live. P2P video streaming allows people to see content in real-time without having to download the content first. Since BitTorrent Live will also be used for official and legitimate content distribution, throttling bandwidth by the operator might be seen as breach on competition laws by the European and American authorities. This will make it difficult for operators to control the flow of data in their fixed and mobile networks.

For years operators have paid billions for spectrum. Millions of man-years have been spent on building standards like GSM, GPRS, CDMA, 3G, LTE, etc. Can disruptive innovation kill this in a few years?

Yes, it can. The FCC is finding out that large parts of the USA are still not covered by mobile broadband. After years of lobbying by groups like the New American Foundation, the FCC has finally decided to start with White Spaces. White Spaces are also being rolled out in the UK. White Spaces allows spectrum to be opened for public usage, which was previously used by analog television or to separate different adjacent channels. White Spaces have been referred to as “WiFi on Steroids”.

Another disruptive technology is software-radio networks in which mobile devices use software-driven radio technology instead of hardware-driven radio technology. This allows a mobile device to be compatible with different standards and to switch and evolve quickly. Putting software-radio in a mobile phone will make it possible to use dynamic white spaces, in-door networks, etc.

A final disruptive technology is Openflow. Openflow, is part of software-driven networks, in which routers, bridges, firewalls, loadbalancers, etc. are implemented on software-level. Networks can be virtualized and used with different QoS and configurations at the same time.

Google and Microsoft are major backers of the White Spaces initiative. They also control two important mobile operating systems. Google is also running pilots with fiber-to-the-home. Google has its own routers and other network technology.

Google could easily be the first White Space operator and use a Fon-like way to roll out their network.

Killing ARPU

SMS is already death, and it will be just a matter of months before operators will see deep dives in revenue. Apple could make the iMessage protocol public and Android could come with a standard iMessage-enabled solution and people would no longer send SMSes but would not even realize it.

Next one on the list are calls. Roaming is already seriously being challenged for years by Skype and others. Operators are planning for VoLTE, or voice over LTE, only by 2013-2014. However most will start rolling out LTE in 2012. This is the ideal situation for Voxtrot, and others, to use the vacuum to get people accustomed to free calls. By the time VoLTE will be available there might just be one market price for it: FREE.

Other value-added services, are already being substituted. MMS is called Twitter & Facebook mobile app now. PBX are now on the Cloud. Call centers are now offered as a service.

Killing ROI

Operators are pushed by the market to invest in LTE roll-outs. However why would you need LTE? There is not a single operator service at this moment that will make people queue up in front of their stores to get an LTE subscription. There are a million and one reasons in the form of mobile apps, mobile video streaming, social networks, HD Video-calls, etc. that can push customers towards the over-the-top-players.

So network investment is only going to rise and revenues from the new technologies will be meager at best, if not cannibalizing high-ARPU services.

With Mega Upload and other sharing sites being disabled, illegal file-sharing is not going to go away. P2P is likely to come back with a vengeance. It is easy to shut down large sites. However what if special encrypted P2P apps are used to distribute the location of content and botnets for distribution. There are a lot of computers that are connected to the Internet but are badly secured. Instead of using them for spamming, Mega Upload 2.0 services can use them to store and distribute content. As long as these “hacked” computers use HTTP(S), it will be very hard for operators to distinguish regular do-it-your-self websites from illegal content hubs.

Killing the operator’s established business model

Operators have educated subscribers that everything that comes from them has to be paid for. Disruptive operators like Free.fr are undoing this education by giving a lot of services for free when you pay the monthly subscription fee.

The Freemium business model is likely to find its way into the telecom industry. The model in which 90-98% of the users get the service for free and 2-10% generate the revenue by purchasing premium services. Combined with advertisement, this is the model of big successes like Zynga, Linkedin, etc. Disruptive players that adopt Freemium are likely to start offering services outside of their country borders since the more people participate, the better. With a winner-takes-it-all business model expect roll-outs to be very aggressive.

What can the telecom industry do?

The first thing operators should do it to tell their providers that their top problem is the lack of new revenues that will sustain the industry. Not LTE roll-outs, not fiber-to-the-home, not customer experience management, etc.

Telling telecom providers that new revenue solutions will be a top priority for 2012 will shift R&D budgets into the right direction.

The second thing operators should do is to stop using their existing purchasing techniques to try to generate new revenues. Nobody will be able to invest 5 months into an innovative solution, spend 3 months doing business development, pass 3 months on filling out RFIs, pass another 4 months filling out RFPs, 2 months on contract negotiations and 6-8 months on delivery. The industry can not wait 2 years to launch the first solution. Especially the herding nature of operators is making any introduction of new innovative services difficult because everybody wants a market leading solution but nobody is willing to be the early adopter.

The response should be different. Joint innovation teams that are able to break the “established rules”; that are able to launch “beta-quality” services to early adopters; that are able to innovate with both technology, business model and go-to-market strategy, etc. Operators should be embracing innovation and learn from the IT industry and even better the dotcom industry on how innovation is done quickly, efficiently and successfully…

P2P, short for Peer2Peer, allows computers to communicate directly instead of having a central server managing the communications. P2P became (in)famous for (illegal) file-sharing. Skype was the first company that understood the potential and used it to revolutionize PC to PC communication.

A recent list of dotcoms is starting to find new uses for P2P. Wuala is an example whereby cloud computing and P2P is combined to offer an innovative backup solution.

Also the academic investigations into P2P are very active, an example is the chord project.

Why is P2P interesting?

P2P runs locally on a computer and allows direct communication between other computers. From an operator´s perspective this means that communications are direct between PCs which reduces long-distance routing to central servers.

For the user the big advantage is the redundancy and resilience of a P2P network. Have you ever uploaded content by mistake? On a cloud computing or client-server solution this can be easily removed. If the content becomes popular on a P2P network then it is virtually impossible to remove it.

What are the disadvantages of P2P?

Too much file sharing means that a small set of broadband users are monopolizing the operator´s network. Operators prevent this by reducing the bandwidth an individual user can take up with P2P connections. This bandwidth reduction results in unreliable speeds for legitimate uses of P2P.

How can the operator make money with P2P?

If P2P bandwidth can be reduced, then it can also be increased. These changes in quality of service can be a premium offering. Who would be interested in purchasing them?

By itself they are useless. However if the extra speed resolves real business and consumer problems then there is a market.

Peercling = Peer2Peer + Cloud Computing

Cloud computing is an over-hyped term. Software-as-a-Service is a subset of cloud computing and focuses on providing services in a remote manner on a pay-as-you-use basis. A good example is Salesforce that offers customer relationship management, among other solutions, via remote access on a pay-as-you-use basis.

Remote access is important here. What if a sales director is not connected, e.g. in the car, on a plane, etc.? Cloud computing is often useless if you are not connected.

Peercling to the rescue. Peercling is the combination of P2P and Cloud Computing. A local P2P client allows users to access a local copy of the data while not connected. Afterwards this data is synchronized with other peers, servers or cloud computing solutions.

Why can´t we use client-server?

P2P is important to Peercling. A lot of server or cloud computing solutions have vast quantities of data. A single PC might not be big enough to store this much data. P2P comes to the rescue when applications might not be able to connect to a remote system but are able to connect to local PCs. When does this happen? If the internet connection is down but the LAN is still working or when the server or cloud computing solution is down.

The power of having access to multiple peers allows vast amounts of data that are stored in cloud computing solutions to be distributed over a large number of peers. If the cloud computing solution is not available then the user can continue working because the information can be retrieved from other peers. Afterwards changes are synchronized when the cloud computing solutions is accessible again.

P2P also allows computers to communicate and collaborate together without the need of a server. Sharing documents between a group of people to work on them collaboratively is possible via P2P. Afterwards Cloud Computing can be used as a backup of these collaboratively edited documents.

Show me the money

A lot of Cloud Computing solutions would benefit from having a local client available in case the user is not able to connect. Instead of having individual fat clients, there is room for a general platform that isolates the complexity of P2P and connecting to external services like clouds. Given the fact that these applications need a good internet connection, the safest bet is to have the operator offering this platform. The operator can make sure network speeds are optimal. On this platform third-parties can then offer their “P2P-Cloud Applications”. Think of it as an iPhone (=Peercling client) and an App Store for P2P Apps.

If you like the idea but need some more details, why don´t you contact the author at maarten at telruptive dot com?

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